City council agrees to spend $4.75M to buy old hospital

Vacant for 13 years, the old Sault Area Hospital buildings on the waterfront will be purchased by the city for $4.75 million.

City council voted unanimously tonight to buy the property from Leisure Meadows Community Living Inc. and 1667271 Ontario Inc.

The decision follows five years of frustrated efforts by the city's building standards and legal staff to get the property safely secured and maintained.

"We are at a point where every year we don't do something about this property, is a year that we are leaving significant money on the table in terms of potential tax revenue, and a year that our community is not benefiting from the redevelopment of a beautiful and pristine piece of our waterfront," said Mayor Matthew Shoemaker.

"The only way we can impose conditions on this property is if we sell it to someone after owning it and impose those conditions on them," the mayor said.

"This has been a source of contention in our community in terms of the state of disrepair it's been left in.

"We have tightened up our property standards bylaw three to four times in the 10 years I've been on council, every time with this property in mind, frankly.

"How is it that they are getting around our property standards bylaw?"

"The reality is, every time we've tightened it up, the ownership has only met the bare minimum of the new property standards bylaw.

"And that is all that I believe this property owner is ever going to do. There is never going to be a redevelopment, unless we are the impetus for change on this property," Shoemaker said.

The game plan now is for the city to buy 995 and 941 Queen Street East, quickly issue a request for proposals and sell the properties to a developer, generating $2.3 million to $2.5 million. 

The developer would then pay the estimated $4.5 million cost of demolishing the old General Hospital building.

The renal building would be refurbished.

The site has potential to host between 140 and 422 residential units, creating as little as $1.2 million or as much as $20.9 million in additional annual tax revenues over 20 years, depending on density and the number of affordable housing units included.

"Based on current experience, staff believe the scenario with 30 per cent affordable units would likely be the highest number of affordable units for a new development on this property," said Tom Vair, the city's chief administrative officer, in a report prepared for tonight's meeting.

"In the high-density scenario, this translates to $15.3 million over 20 years with a two per cent average annual tax increase," Vair said.

"The medium density scenario would generate $5 million over that same period."

The land is to be sold as three parcels, as shown in the second image in the photo gallery above:

• Area A including the former General Hospital site to the waterfront
• Area B consisting of a parcel of land with waterfront access
• Area C including the former Renal Building and a large portion of waterfront land

Vair said the negotiated $4.75-million sale price for the three properties was arrived at after considerable bargaining.

"We started with a much higher number – probably over $10 million, and we ended with $4.75 million," Vair said.

"We feel that given the analysis of return on investment, we have a price that we can recommend to council and an opportunity for the community to move forward."

Can't the city just seize the property for unpaid taxes?

No, said Shelley Schell, city treasurer and chief financial officer.

"The property only has the current year outstanding," Schell said. 

"The tax sale process is governed by regulation, and there must be three years in arrears in 2024, and that'll change to two years in arrears in 2025. So at this point we cannot register the property for tax sale."

So what's the earliest the city could arrange a tax sale?

"We would be eligible to register the property in 2026 and then there's a one-year redemption period," Schell said.

So it wouldn't actually go to tax sale until 2027 and that... is assuming that the taxes are not paid."

And that can be a big assumption.

"This is a bit of a game that certain property owners play, where they hold off on paying their taxes," Mayor Shoemaker said. "They'll pay right at the last minute."

"The owner can come in December 31 of 2025 pay one year in taxes, and it adds another year," Schell added.

"There's no guarantee that it is ever going to go to tax sale. It has not been registered in the previous history at all. There's no guarantee that it will continue down that road," Schell said.

"So it's not something that we should be banking on, that we will be able to take the property through a tax sale."

"Is there opportunity to encourage future developers to include a grocery store of some sort?" asked Ward 1 Coun. Sandra Hollingsworth.

"What we hoped to do was leave it open to developers to come through with their proposal," replied Tom Vair, the city's chief administrative officer.

"That could include commercial. It could just include residential," Vair said.

"I know there are other efforts in the community looking at a grocery store in the downtown area. So I don't know that we want to force the solution on the developer."

"We would leave it open to them to bring forward any proposal like commercial or residential," Vair said.

Additional information is currently being added to this article.